Shares of energy companies climbed with crude prices on Thursday, contributing to a broad rally in U.S. stocks.
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Energy shares had been under pressure for much of the month, extending losses for the year after Hurricane Harvey crippled Gulf Cost refineries, ports and pipelines and sent crude prices lower.
But on Thursday, energy stocks in the S&P 500 rose 0.6%, lifting broader indexes. Commodity prices rebounded, too, with U.S. crude jumping 2.8% to $47.22 a barrel.
"It's just so beaten down that you're now getting the reversion trade," said Doron Barness, global head of trading at Oppenheimer & Co. "A lot of people have been short energy," he added," so some are also moving to cover their shorts."
The Dow Jones Industrial Average rose 0.1%, or 31 points, to 21923 in afternoon trading. The S&P 500 gained 0.5%, while the Nasdaq Composite added 0.8%.
Marathon Oil, one of the energy sector's biggest gainers, was up about 3%, while Newfield Exploration rose 2.7%. Even after the day's gains, energy shares in the S&P 500 continue to head toward their biggest monthly loss since December 2015.
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Fresh data suggesting the U.S. and global economy has continued to grow at a steady, albeit slow, pace also helped buoy major indexes, even as geopolitical tensions continue to overshadow markets, some investors and strategists said.
Americans' personal spending rose in July at the fastest pace since April, while personal incomes posted their biggest one-month jump since February, according to the Commerce Department.
Meanwhile, an official gauge of China's factory activity rose in August, even though new export orders declined.
The data followed upbeat reports Wednesday showing U.S. gross domestic product growth was stronger than initially thought in the second quarter, while hiring among U.S. private employers increased by more than expected.
"The economic story has been solid and there hasn't been any significant escalation since tensions rose," said Jason Draho, head of tactical asset allocation Americas for UBS Wealth Management. "Investors are relatively calm."
Investors are now awaiting Friday's monthly jobs report, which, if positive, should keep U.S. stocks climbing, some investors say, even as many worry about the length of the stock market rally.
"The easy money was made some time ago," said Rob McIver, a portfolio manager of the $6 billion Jensen Quality Growth Fund. "The market does seem to be changing from risk-on to slightly more conservative."
Stocks were also higher across the world, with the Stoxx Europe 600 up about 0.8%.
The euro dipped slightly against the dollar, falling 0.1% to $1.1875, on the back of media reports that European Central Bank officials are concerned about the single currency's surge in the past four months. A stronger euro could damp inflation gains by making imported goods and services cheaper.
"We see the risks as still skewed toward the euro overshooting above $1.20 at some point this year rather than permanently reversing lower," said Deutsche Bank strategist George Saravelos in a note to clients published Thursday.
Earlier, Japan's Nikkei Stock Average closed up 0.7% after weakening in 14 of the past 19 trading sessions, leaving the index down for August. Hong Kong's Hang Seng Index added 0.4%, posting a monthly gain.
Kenan Machado contributed to this article
Write to Michael Wursthorn at Michael.Wursthorn@wsj.com and Mike Bird at Mike.Bird@wsj.com
(END) Dow Jones Newswires
August 31, 2017 14:53 ET (18:53 GMT)